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Message:: [QUOTE="beef1020, post: 2446337, member: 24544"]For one, prices are not a linear function of demand like that, I've done regressions on price and always find an exponential relationship. Second, how do you determine the demand? The market provides that information via price, but independent of price, there is no way to find that signal. Third, the relationship between demand and supply regardless of it it's price or done with some other calculation, should behave the same way, because they are both a function of the same underlying relationship. I would posit that to the extent this ratio provides a different signal than the price signal it's because the estimated demand had more error, not because you found an undervalued coin. The overview here, price is a function of supply and demand.  Extant ratio is a function of supply and demand.  Because both metrics are entirely governed by the same two variables they should both behave in the same way when compared across coins.  But, for the price function you can look at the market and find the price.  You can look at research and find the supply.  Given that we know with a high degree of certaintaty two of the value, we can get a pretty clear picture of the demand.  In the extant ratio, we only know supply and have to guess at demand.  So it will always be a much less accurate attempt at providing the same information that price already does.[/QUOTE]